The statistics released recently by the government indicating that the manufacturing sector contributes only eight percent of Kenya’s gross domestic product against a target of 15 percent is very discouraging and calls for serious measures to fix it.
By naming the sector as one of the Big Four agenda, there is optimism that the sector, which has recorded an annual growth of less than 10 percent in the last two decades, will now get the support it has lacked.
Kenya’s balance of trade indicates that we are an import oriented economy.
The country has not invested properly in the manufacturing sector despite the huge potential to produce a substantial amount of our consumables. We have ended up importing even the most basic commodities.
The 2019 World Bank Ease of Doing Business Index ranked Kenya 56th position out of 190 countries globally. This is an improvement from 61 in 2018. But it means that businesses still face many challenges.
Several manufacturers in the country have either closed shop or scaled-down operations in recent years due to the rising cost of production such as energy and transport.
This happens when the goods produced locally are not able to compete with cheap imports from the countries that have reduced their cost of production.
To change this trend, the government must enact policies that support the manufacturing sector such as a favourable tax regime for importers of raw materials.
Other policy shifts should seek to support those who produce local raw materials by offering training on the best practices.
Although the country has invested in infrastructure, there are areas with valuable resources that do not have accessible road network.
To create the one million jobs that the government promised young people, the national and county governments should focus on removing non-tariff barriers to attract more local and foreign investors.
Each county has its comparative advantage and has the potential to attract investors. For instance, water hyacinth on Lake Victoria, which has troubled Kenya for many years is a raw material that young people in Nyanza have demonstrated can make furniture of impressive quality. Ironically, most of the furniture used by the high-end market in the country comes from abroad.
Another important thing is the need to create a linkage between the manufacturing sector, capital and markets.
Efforts to empower the youth to participate more meaningfully in the economy have suffered immensely due to this.
The government gave a directive for all its procured goods to be sourced from the youth.
Considering their background as a marginalised group, the government ought to have created an integrated approach where young people are not only given a market but also given guarantees to access credit from financial institutions. After all, the government is one of the biggest consumers of goods and services.
A few years ago, we launched, with pomp, a campaign through Brand Kenya dubbed, ‘Buy Kenya to Build Kenya’. What happened? If the problem is the quality of our products, as it can easily be argued, enhancing capacity is a long-term strategy that should fix it to rejuvenate the manufacturing sector.
We are telling our young and innovative minds that local is inferior and that good things can only be imported. That will only breed a generation that has no faith in their people, institutions, firms and country.
Another area of consideration is the exploitation of ocean-based resources mostly referred to as ‘blue economy’.
The blue economy activities include exploiting living resources such as seafood and marine biotechnology, seabed mining and generation of new resources such as energy and fresh water. We have only focused on fisheries both for domestic and export markets.
Kenya has a maritime territory of 230,000 square kilometres and 200 nautical miles offshore, which is equivalent to 31 of the 47 counties. Results from this sector can only be achieved through an integrated maritime policy.
As the Kenya Association of Manufacturers CEO Phyllis Wakiaga said at a recent Nation Media Group Leadership Forum, manufacturing can alleviate poverty, create employment and wealth as well as increase development.
Raphael Obonyo via e-mail